O & A Reports and Headlines

Otis & Ahearn's unique synergy of residential brokerage and new development sales & marketing services has made us the trusted advisor to real estate developers, investors, and financial institutions. At the foundation of that trust is our dedication to detailed market data. Our in-house research analysts focus on the Downtown Boston, Urban Emerging and select Suburban real estate markets. They produce numerous reports including our Weekly Market Update, Leverage Trends, and S.U.R.E. Trends. This comprehensive business approach to real estate data analysis is unparalleled in our market.

O&A View

Three weeks into the 2012 there are not enough closed transactions to formulate an opinion about the market.  However we can state that we are off to a slow start and that is surprising.  One data point that has our attention is available inventory, or lack of inventory to be precise.  A three year comparison of 1/20/2010, 1/20/2011, 1/20/2012 from MLS shows a dramatic drop in inventory:


Trend of Condominium Inventory in Downtown Boston (Source MLS/Pin)


1/20/2010                            1/20/2011                            1/20/2012
     988                              845 (-14.5%)                        678 (-19.8%)

 

 

YE Sales Transaction 2011 – 2719, here is how they break down:


# of Sales                          Price Segment              Sales per Month
  1490                                       0-$499K                        124.2/Month
   856                                   $500K-$999K                   71.3/Per Month
    373                                      $1MM+                        31.1/Per Month 
  2719                                  All Prices                          226.6/Month


Total Inventory: 678  (Source MLS/Pin 1/20/2012)


Inventory break down by price:


Price Segment               Inventory                    Sales per month           Months Supply of Inventory
    0-$499K                          255                                  124.2                                       2.05
$500K-$999K                       255                                   71.3                                       3.57
     $1MM+                          168                                    31.1                                       5.40

All Price Points                  678                                   226.6                                      2.99


The universally accepted “balanced market” is 6-7 months of inventory therefore upward pressure on prices is imminent with a few over asking price sales occurring recently.


For a copy of Otis & Ahearn's Downtown Boston Condominium Weekly Report, click here to request.
 
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O&A View

YE 2010 we took note of the rebound of the Downtown Boston real estate market in the wake of the Financial Crisis and the Great Recession (2008/2009): “As we start the New Year all of the Downtown Boston Condominium trends noted above are positive.  The number of transactions closed in 2010 was up 2% over 2009.  The total sales absorption finished the year 15% ahead of 2009 with $23,645,683 more in sales.  The average and median selling prices are up 13% and 7% respectively over 2009.  While those numbers are eye-catching what is most impressive is that at year end the median selling price of a Downtown Boston Condominium is equal to the record median selling price - $470,000 set in 2008.”  Those trends have also continued through year-end 2011, for two consecutive years of solid numbers for the Downtown Market.  Values have held as is demonstrated by the key data points for the five year period beginning in 2007:

 

                        Transactions                  Absorption                   Average Price      Median Price

2007                       3706                       $2,284,296,470                  $616,378              $459,500
2008                       3131                       $2,250,410,638                  $718,751              $470,000
2009                       2598                       $1,537,521,929                  $591,810              $441,000
2010                       2665                       $1,785,705,754                  $670,058              $470,000
2011                       2712                       $1,793,172,920                  $661,199              $468,500

 

We expect prices to hold and experience upward pressure as inventory remains tight and the demand to live in Downtown Boston continues to be strong.  A new development cycle has started with Seaport/Innovation District kicking into high gear and announcements of multiple mixed use projects.   In our review, five key headlines emerged which frame-up the year 2011 and give indications on the future direction of Downtown Boston housing.  They are, in no specific order:
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O&A View

Nationally homebuilding is on the rebound from the declines which began in 2006 as the real estate market began to soften and the economy slowed. Over two thirds of the increase in housing starts in November came from Apartment, Townhouse or Multi-Family property construction.  Demand for rental housing increased during the Financial Crisis and Great Recession and has remained solid. Downtown Boston has one of the lowest vacancy rates in the nation, currently 4.2%, as a result developers are able to combine high demand, high rental yields, and low interest rates to create housing at a profit.  Developers whether they are privately held or large Real Estate Investment Trusts (REIT”S), are moving quickly to build in Downtown Boston.  Locally from “The Fenway Triangle” on Boylston Street to “The Victor” on Causeway Street there are nearly 3000 apartment units either proposed, permitted, or under construction.  All the while, demand for owner occupied purchases has held steady while there has been a slight decrease in inventory.   The nexus between rentals and owner occupied properties in Downtown is that; as land and rehab properties are committed to rental development, pressure will increase on property values.  As the new for sale pipeline becomes further constrained, upward pressure on pricing will occur.
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